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The Commons Problem (or the Real Case For Culture)

Everyone likes the guy who figures out how to get things done: the fixers, the innovators, the Radar O’Reilly’s who develop the informal network of favors to cut through the bureaucratic silos and “make things happen”. When I was running a large sales organization I had plenty of those folks and they were often my most successful producers. They had figured out how to grease the system, who to call for an expedited approval, how to divert disproportionate corporate resources toward their pet accounts. By way of full disclosure, as a young salesperson I was probably one of those people myself.

I admired those teammates but to be honest, they scared me as well because I could not shake the thought that if everyone behaved in that same way, the company would inevitably collapse into chaos. The license to self-organize, to collaborate across boundaries and to innovate processes depends on a tight alignment between the self-interests of the individuals and the goals of the organization to which they belonged. We often take that alignment for granted but I knew full well that was a mistake to do so.

In 1833 William Forster Lloyd, an English economist, wrote a paper in which he described the behavior of herders who are all grazing their cattle on the same parcel of common land. An individual herder could make the independent decision that it is in his self-interest to add cattle to his grazing herd even though it would contribute to the quicker depletion of the commons grasses. He makes that choice rationally since the short-term benefit of his additional animal accrued to him alone while the negative long-term impact on the commons was shared across the entire group.

But if all the herders were independently making the same rational self-interested decision regarding individual gain and collectivized loss, then the commons would deteriorate at a far faster rate and everyone would suffer. This metaphor has come to be known as the “tragedy of the commons” and was later popularized in 1968 in an article by Gareth Hardin which set off a decades-long debate on exactly what this meant for ecology, population, pollution, political philosophy, social welfare, sustainability and on and on.

The “commons problem” is one of our most profound challenges for businesses, indeed all organizations. We want people who figure out better ways to do things, not simply people who do more of the same thing. Yet when self-interest is the compelling motivation those successes may simply reflect cutting corners which create more work for others, or engaging too many resources thereby depriving them from their peers. Their short term individual motivation may stunt rather than enhance the ability of the organization itself to grow. Modern collaboration tools may indeed allow new interactions among colleagues but if those interactions merely quicken the ability to exploit self-interested behavior, we haven’t really done much good.

“Freedom in a commons brings ruin to all” Hardin suggested. In modern business terms we might replace “freedom” with collaboration, delegation, innovation or any number of buzzwords to describe colleagues solving problems in more kinetic, boundary-busting ways. And for those of us raised on the extrapolations of Adam Smith’s invisible hand, the idea that self-interested motivation could be anything but good is disquieting. But every sales leader knows the salesman who would enthusiastically sacrifice company profit if it helped him overachieve his personal sales quota. Most managers have encountered score-carding problems where cross-divisional programs benefiting the entire organization would be rejected solely because individual executives could not agree on which departments would get to report the financial gain, a perverse restatement of the commons problem in which executives may rationally choose not to engage in the common good unless it maximizes his or her short term position.

A sea of thinkers since Hardin’s article have suggested numerous ways to minimize the impact of the commons problem. Hardin’s own conclusion was simply either regulating commons land or privatizing them altogether. However, within business organizations we have a secret weapon: our corporate culture.

Too often a company culture initiative is a managerial afterthought or an ineptly executed HR distraction. When it is managed poorly it is fair game to be ridiculed and derided. But our delight in pointing out poor execution should not trick us into dismissing the need for culture itself. A healthy common culture is the greatest tonic to unreserved self-interest. The governor against poor individual decision-making is the shared sense of belonging to a bigger enterprise with shared goals and long term values. Aligning the interests of the individual as tightly, passionately and genuinely to the interests of the firm is both the essential ingredient to real innovation and the preeminent responsibility of corporate culture.

How nice it would be if organizations adapted as fluidly and gracefully as the murmuration of a flock of starlings but that just doesn’t naturally happen. We require innovators at all levels pushing the boundaries of our bureaucracies and discovering quicker and better ways of doing things. But they must do so on behalf of the common welfare not just their own. Company cultures are built precisely to remind individual innovators of the corporate community to which they belong, and to provide the sure footing from which to channel their energies toward the common aspirations of the organization.

In an age where working across corporate silos is all the rage, don’t be fooled: the true leader’s job is not to knock down walls but rather to pour firm foundations.

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4 thoughts on “The Commons Problem (or the Real Case For Culture)”

John – great article – in fact, I was having a conversation about corporate culture with a co-worker this morning. My extension to your article is that in order to discourage the rational self-interest of a single sales person damaging the organization, that organization must have proper compensation metrics – certainly the most difficult task. Very often, the stated goals of the organization do not match the compensation (positive) or known risks for continued employment (negative) “real world effect” on the individual. I believe that if the individual goals & rewards truly support what the organization actually values (vs. what it states), a lot of the problem is eliminated.